Who will register and pay GST for OIDAR services when the service provider is located outside India?

In respect of import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India will be responsible for payment of taxes.

The service provider (or intermediary as the case may be) will be required to take a single registration for paying IGST under the Simplified Registration Scheme to be notified by the Government.

Either he will have to take registration or he will have to appoint a person in India to pay GST.

Does reverse charge apply in OIDAR services?

The person receiving any such services i.e. OIDAR should pay the IGST to the government only if he is registered under GST as a taxable person.

Why does OIDAR service require a treatment different from other services?

The peculiarity of OIDAR service is that it can be provided online from a remote location outside India.

If a similar service is provided by an Indian Service Provider, from India to recipients in India then such service would be taxable.

If such services are received by a registered entity in India then GST will be payable under reverse charge.

This gives the overseas suppliers of such services an unfair tax advantage if their services are left out of the tax net.

Again, as the service provider is located overseas and might not have a presence in India, the compliance becomes difficult. So, the government has a simplified scheme of registration for such service providers located outside India.

Place of supply for OIDAR

What is the place of supply for OIDAR?

Supply

Receiver

Place of supply

Supply of online information and database access or retrieval services

Any person

Location of the recipient of services

How to determine the location of the recipient?

For this service, the recipient will be deemed to belocated in the taxable territory (i.e., in India) if any two of the following conditions are satisfied-

Location of address presented by the recipient through internet is in India

Credit card or debit card (or any other card such as store value card) which the recipient uses to pay is issued in India

Billing address of the recipient of services is in India

IP address of the device used by the recipient is in India

Bank of the recipient’s account used for payment is maintained is in India

Country code of the subscriber identity module card used by the recipient of services is of India

Location of the fixed land line through which the service is received by the recipient is in India.

The government can notify any service or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service. This will be done in order

prevent double taxation

prevent non-taxation of the supply of a service

for the uniform application of rules

Special provision in case of a service provider outside India and a non-tax-payer in India

Supply

Service provider

Receiver

Who is liable to pay IGST?

Supply of online information and database access or retrieval services

Any person located in a non-taxable territory

Non-taxable online recipient

Supplier of services located in a non-taxable territory

This situation is quite common in India.

For example, a student in India registers in Netflix (US) for watching movies. Netflix becomes liable to register in India and pay IGST.

What happens where the OIDAR service provider supplies services through an intermediary?

If an intermediary located in outside India, arranges or facilitates the supply of OIDAR services, from the service provider to the non-taxable online recipient.

then the intermediary will be deemed to be the recipient of such services.

But if the intermediary satisfies the following conditions then it will not be considered as a recipient–

(a) The invoice issued by the intermediary clearly identifies the service and its supplier in non-taxable territory

(b) The intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services

(c) The intermediary does not authorise delivery

(d) The general terms and conditions of the supply are set by the service provider and not by the intermediary

How our software can help you?

ClearTax GST Software will make your life much easier. For your sales invoices, you do not have to calculate the place of supply each and every time.

All you need to do you see enter the details of your buyer in the contacts master. You can use ClearTax Bill Book to generate sales invoices. Based on you buyer’s and your GSTIN the software will automatically calculate the place of supply according to the provisions and inform you whether you will charge CGST/SGST or IGST.

For your purchases invoices, all you need to do is upload the excel copy of your purchase invoices. The software will do the rest.

Efiling Income Tax Returns(ITR) is made easy with ClearTax platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with ClearTax GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. ClearTax can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with ClearTax by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download ClearTax App to file returns from your mobile phone.